How many years can I move out of my previous house without paying capital gains tax when I sell it?

Question

I got married 2 years ago - was unable to sell my house at that time - bought another house with my wife - now I want to sell my previous home - Am I liable for capital gains tax.

I had been lead to believe that there was a 3 -year exemption from when I moved out until I sold - anyone aware of this?

Answer 1

Yes and No.
If you sell it for a profit then yes you will. But you can delay paying the capital gains if you reinvest it in something else.

Answer 2

When you sell you calculate the gain over the whole period of ownership using indexation (where appropriate) and taper relief. Then you calculate the private residence relief.

You need to calculate the length of time the property qualifies for PPR. This is basically the time you were actually living in it. But, (and this is the important bit) the last three years will count even if you were not living there.

So if you sell within three years of moving out the whole period is still exempt. If you sold after four years then one year would be chargeable as there would be a gap between moving out and the start of the last three years.

Don't forget that even if some of the gain is chargeable you still have an annual exemption. And if you have let it out at any time when you were not living there lettings relief could also reduce or eliminate the bill.

Answer 3

You must have owned the home for at least two of the five years immediately prior to the sale (doesn't sound like that's a problem), and lived in it as your main home for two years out of the five years immediately prior to the sale, to have $250,000 of the gain ($500,000 if married filing jointly) excluded from taxes. Contrary to what someone else said, if you left some belonging in your prior home but lived somewhere else, that doesn't count. But if you lived in the home for at least two years right before you got married, then you'll be OK as long as you sell it by three years from the time you moved out.

There is no longer any requirement to reinvest the gain into a replacement home - that rule has been gone for a few years now.

Go to irs.gov and research "selling your home". By asking on Yahoo Answers, you get answers from too many people who don't know what the rules really are, or respond based on law that has changed.

Answer 4

theoretically you are liable for CGT on either of the properties if you aren't living in one of them, however you are allowed some indexation on CG.

if you remained in occupation, or in part occupation (natch you did.. you kept some stuff in the back bedroom, and occasionally stayed there.. didnt you, when you had that all might bust up with your wife.....) then there shouldnt be a problem.

There is no allowance.. as soon as you left the property it became an asset that would generate a CGT liability when eventually sold. (if you left the property to move to a new property and immedaitely tried to sell the old one thats ok, but not if you rentreed it out for a bit, or left it vacant without trying to sell it). That liability must be accoutned for in the tax year it occured (ie the year you received the proceeds from the sale).

but you will be liable only for the capital gains that have occured since you left the property... not the full time that you have owned the property. by defintion you can only have one princiapl place of residence

Answer 5

The first answer seems to give the situation for the USA. In the UK the gain is split on a time basis between the period you lived in it (the last 3 years of ownership would count towards this, regardless) and the period you rented it out. The part split to the period you lived in it is exempt from capital gains tax. The other part is also exempt if it is not more than £40,000. If more, only the excess is subject to tax - at a fixed rate of 18%.

Answer 6

if your house was for sale since you moved out you are able to not pay capital gains. you are even able to rent it to offset expenses untll it sells. im in the same situation.

Answer 7

I think it has to be 12 months...